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Micro Environment

“The micro environment consists of factors in the company’s immediate environment”. These factors affect the performance of a company and its ability to serve the customer. Every firm has a micro environment that consists of customers, suppliers, competitors, and public and market intermediaries.

A brief discussion of the firm’s micro environment is as follows:

(i) Customers:

Customers constitute and important segment of the micro environment. Business exists to serve its customers. Unless there are customers, business means nothing. A company can have different types of customers like, households, producers, retailers, Government and foreign buyers.


Suppliers supply inputs like money, raw material, fuel, power and other factors of production.

Suppliers help in smooth conduct of the business. Firms remain aware of the suppliers’ policies as increase in the prices of inputs will affect their sales and profits. Shortage of supplies also affects the production schedules. Firms should have more than one supplier so that change in policies of one supplier does not disturb their production schedules.

(iii) Competitors:

Competitors form an important part of the firm’s micro environment. Firms compete to capture a bug share of the market.

They should constantly watch competitors’ policies and adjust their policies to gain customer confidence.

(iv) Public:

“A public is any group that has an actual or potential interest in or impact on and organization’s ability to achieve its interest”. Public can promote or demote company’s efforts to serve the Market. The term ‘public’ consists of financial public (banks, financial institutions etc.), media public (newspapers, radio, television etc.), Government public, customer organization, internal public (workers and managers), local public (neighborhood or community residents) and general public (buyers at large). Companies observe the behavior o these regroups to make functional policies.

(v) Market intermediaries:

They are the links that help company to promote, sell and distribute their products to final consumers. They are the physical distribution firms (transport companies), service agencies (media firms), financial intermediaries (bank, insurance companies) etc. that help in producing, marketing and insuring the foods against loss of theft, fire etc. Firms maintain good relations with them to carry their activates smoothly.

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